The Chinese economy is hitting the breaks on its growth momentum after disappointing analysts’ estimates. The world’s second-largest economy’s GDP grew by 7.9% during the second quarter compared to the same period last year.
No matter how robust the advance is, the actual result still failed to clinch the 8.1% given during the final consensus. It is also a sharp downgrade from the 18.3% year-on-year growth notched during the first quarter.
The first-quarter result was already expected. It was a mere correction from the subdued economic activity during the first three months of 2020.
During that time, the Chinese government entered into one of its biggest crises to date after its business districts entered draconian lockdowns to curb the spread of Covid.
The swift restrictions weighed on the gross domestic product, along with the poor international orders during the period.
In Q2’s performance, the economy grew by 1.3% on a quarter-on-quarter basis. This exceeded the 1.3% growth forecast.
In a more detailed look at the report, the country’s industrial production improved by 8.3% in June. This is in comparison to the same month in 2020. It is in line with the 8.8% growth from the preceding month. Experts in the field noted that the world’s biggest factory continues to benefit from the improvement in global trade.
Such an uptrend came as more countries in the world, especially ones from the developed world, moved swiftly with their vaccination programs.
Despite the improvement in some fields, the Chinese unemployment rate came unchanged at 5%. This shows that while recovery has finally gained some steam, it is still uneven.
During the period, the administration battled new rounds of infections, high raw material costs, and a global shortage of semiconductors.
People’s Bank of China Holds Rates As Is
Amid the still volatile economic health, the People’s Bank of China decided to keep rates steady during its latest policy meeting.
In a statement, the central bank announced it would keep the interest rate on medium-term lending facility loans at 2.95%. It will benefit 100 billion yuan worth of medium-term loans which have a year of maturity. The move is in line with the central bank’s decision to reduce reserve requirements that it announced last week.
In a statement, the PBOC said that the status quo would keep the country’s banking system reasonably ample as the tax payment season comes.
For the record, the central bank vowed to exercise all the help it could offer as China transitions towards a steadier recovery.
